Return Rate

Product returns even for eCommerce stores can be expensive and reduce profits.
It is important to have a return policy. This will give customers the confidence to shop from your store. If they get an item damaged or are sent the incorrect item they want to know it can be returned. This is something that customers expect especially when they are making a purchase from an online retailer.
Customers often try to return products and it can be a balance between keeping customers happy and making a profit. There are some tips that can help you achieve this balance and keep making a profit.
What is Return Rate?

The return rate is the percentage of products returned against sales. If you do not offer a return policy you may lose customers. You can make the rate of returns and still make a profit.
How to Calculate return rate?

To determine the rate of return and the cost you need to divide the number of items returned by the total sales for that period.
RR = cost of items returned / the total sales. They then multiply this figure by 100.
For example, if you order 8 dresses costing $120 and the dresses that are returned are worth $30. The return rate is (33/120) * 100 = 25% Online purchases have an average return rate of 20 to 30 percent.

Impact of High Return Rate

Front end costs

An increase in returns will increase expenses. Workers will need to process them and they will take up space in the warehouse. They will then need to be resold or liquidated. When they are liquidated they are sold at a reduced price.

Additional Costs

There are online influencers that will impact the way people shop. Before making a purchase your customers will probably read an online review about your company.
A bad review can hurt your business. When a customer gets a product they do not like and cannot return it they will often go online and leave a bad review.
Controlling Return Rate
Return rate affects profits, image, and related items. You need to keep your returns to a minimum.
There are some things you can do to improve your rate.

Clear Descriptions

When shopping online it is important to give the customers an accurate description of the body. If they get something different or even if the colors do not match they will be disappointed.
You should include accurate sizes, materials, and other information a customer would want to know. This will help them know what they are purchasing and what to expect. The photos that you are posting should be of the actual product.


You should research the products that are being returned. During the return process, customers can leave feedback or take a short survey. This will allow you to know the reasons why they are returning it and make corrections. If the return process is easy customers will leave feedback.

Simple Return Policy

If you have an easy return policy this will help you develop trust with the customers. If your policy is too strict customers may think that you are hiding something and they will not be able to return the item if they are not happy. You can take some measures more lenient. For example, instead of having a 30-day return policy, you can extend this to 60 days. Customers will have additional time to try out the product. Having more time will allow them to take their time and see if they like it. It will also allow them to develop trust with your business.

What is the average return rate for online retailers?

The average return rate for online retailers can vary depending on the industry and specific retail business. However, in general, the average return rate for online retailers is around 30%. According to the National Retail Federation, online retailers generally have a higher return rate than brick-and-mortar retailers, due to the ease and convenience of returning items via the web.

Some industries, such as fashion and apparel, typically have higher return rates because customers may order multiple sizes or styles to try on before making a final purchase decision. Other industries, such as electronics or home goods, may have lower return rates because customers tend to research products more thoroughly before making a purchase.

Furthermore, return rates might vary seasonally. During peak seasons, like Christmas, Black Friday, and Cyber Monday, return rates can be higher.

However, while a high return rate may seem like a negative, it can also be seen as an opportunity for retailers to improve the customer experience, gather valuable data, and increase customer loyalty. By implementing an efficient and customer-friendly returns process, retailers can turn returns into an opportunity for repeat business and positive customer interactions.


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